Why Penalties Are Not Good Incentives For Epayment

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Penalty fees are not a good way to shift customers away from paper bills and into epay.

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In the last several years, a number of utility companies and cable TV providers have tried to nudge more customers into receiving and paying their bills electronically by adding fees for paper billing.

The fee–usually a dollar or two per bill–is meant to be a disincentive, and though it is a small percentage of the typical monthly payment, it gets an outsized–and overwhelmingly negative–response from customers. In Pennsylvania, the public service commission reviewed complaints about these fees and banned them. In other states, negative responses from customers have caused utilities to do away with these fees.

The fees are seen as a penalty, one that will most often be paid by the poor and elderly. A Pew Charitable Trust study from 2015 estimated 42 percent of seniors don’t have internet access. Some people, for varied reasons, don’t use banks and pay in cash or in person. And there are those who can’t be convinced, no matter how many assurances, that their personal data is protected if they are on an epayment plan.

We help a lot of our clients initiate epayment systems, and we don’t recommend using fees and penalties to force current customers to use the new system. Instead, we help our clients create multiple messages about the upsides of electronic billing. Then we show them how to use inserts or empty space on their bills to relay those messages to their customers each month. Over time, by repeating these messages, more and more customers are convinced to get on board.

In the future, as more people become comfortable with online payment and more young people become homeowners and bill payers, the percentage of those who use epayment systems will increase. A good target for most companies is around a third of their customers.

by:

John Young

Director of Business Development


January 23, 2017

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